US Furniture Insights

Executive Summary of November 2015 Issue of Furniture Insights Report

by Kenneth D. Smith, CPA, Smith Leonard PLLC

For the first time in 18 months, we did
not see an increase in new orders
in September 2015 compared to
September 2014, according to our
latest survey of residential furniture
manufacturers and distributors. But the good
news is that we are not reporting a decrease
but instead the new orders were basically flat.
Approximately half of the participants reported
increases for the month.

Year-to-date, new orders were up 4 percent
over last year, down from 5 percent reported
last month. For the year, approximately half of
the participants are reporting increased orders,
as September results pushed some participants
from slightly positive to slightly negative.

Shipments were up 3 percent from September
2014 and up 1 percent from August. Year-todate,
shipments remained 7 percent ahead of
the same period a year ago. At this time last
year, shipments were 6 percent ahead of 2013,
so the 7 percent increase is off of some pretty
good numbers.

Backlogs were up 2 percent from last month and
up 3 percent from September 2014. September
2014 backlogs were also 3 percent higher than
September 2013, so overall the backlog levels
seem to pretty much reflect current business
conditions.

Receivable levels were right in line with the
increase in shipments from September 2014
and August 2015. Inventory levels were 7
percent higher than September 2014 but that
was down from 9 percent reported last month.
Inventory levels will need to be watched.

Factory and warehouse payrolls remained 7
percent ahead of last year on a year-to-date
basis, but that seems in line with the increase
in shipments. The number of factory and
warehouse employees was 4 percent ahead
of last year, very much in line with current
conditions.

National

On the national front, consumer confidence
results were mixed. The Conference Board’s
Index, which declined moderately in October,
declined again in November to 90.4 from 99.1
in October. The decline in this survey related
primarily to the less favorable view of the job
market, with business conditions mixed.

On the other hand, the University of Michigan’s
surveys of consumers reported that their Index
of Consumer Sentiment actually improved from
90.0 to 91.3 in November. Their report was also
mixed as most of their gains came from gains
among middle and low income households while
confidence “retreated” among households with
incomes in the upper third of the distribution.
This report did indicate that consumers are
insistent on discounted prices and lower
interest rates (housing).

The latest GDP estimates for the third quarter show an
increase of 2.1 percent annual rate up from 1.5 originally
estimated. And the Conference Board’s Leading Economic
Index increased 0.6 percent in October following 0.1
percent declines in September and August.

Housing results were somewhat mixed with existing home
sales off from September but still ahead of last October.
Each of the four regions showed a decline from September
but all were still ahead of October 2014. New residential
sales were up over both September and October 2014.
Compared to October 2014, new sales were up 60 percent
in the Northeast and 5.2 percent in the South, but were
down 4.8 percent in the Midwest and 2.6 percent in the
West.

Single-family starts were down 2.4 percent from September
but 2.4 percent ahead of October 2014.

According to the Census Bureau, retail sales in October
were up slightly from September and up 1.7 percent from
October a year ago. Sales at furniture and home furnishings
stores were up 0.4 percent from September and up 5.2
percent over October 2014. Year-to-date, sales at these
stores were up 5.5 percent over the same period a year ago.

After some swings in the stock market, a good portion of
what we lost has come back in October and November. So
that is good.

Overall, we continue to hear business described as
“choppy.” Most we have talked with seem to have confirmed
that the October market was a good one. Yet, we continue
to hear that business is at best “ok.”

We hope by the time you get this, you have had a wonderful
Thanksgiving weekend. We all have so much to be thankful
for and hopefully we took some time to give thanks. As an
industry, we are certainly better off now than we were a few
years ago.

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